Universal Appeal
Virtually all online survey respondents in Latin America (96%) and Asia Pacific (92%) said they purchased H&B products, along with 90% of people around the world who made up the global average. But what prompts consumers to stock their cabinets with make-up, fragrances and personal care items?

For 44% of global respondents, it was the lure of the product’s promise. A pragmatic 69% of respondents said they were influenced by price, while 58% said they bought as a result of a personal recommendation. Magazine articles, Internet buzz and traditional ads all factored into the purchase equation as well.

Product samples helped about half of consumers along the buying path, as did the suggestion of a partner. But aside from price, the reason most consumers (65%) offered up for buying health and beauty products was the influence of their preferred brand.

Half of Asia Pacific respondents indicated that the Internet was a purchasing influence—the highest percent of any region. These consumers were also swayed by magazine articles (45%) and advertising campaigns (44%) more than other region. Conversely, European and North American beauty product choices were the least influenced by print and television ads, magazine editorial or the Internet and were most influenced by price; 82% of North Americans and 70% of Europeans agreed that price was a key determining factor.

Latin Americans said they were most persuaded by their preferred brand (72%) and free samples (60%). Middle Eastern survey takers reported the most balanced responses, giving fairly equal weight across all influencers. They were, however, least influenced by the product’s promise (36%) and most by their preferred brand (63%).

Channel Choices
Far and away, supermarkets were the format of choice for 60% of global respondents, with the drugstore/chemist/pharmacy a distant second destination at 39%, specialty stores in third place at 33% and the Internet trailing at 22%.

Asia Pacific shoppers scored the highest of any region (33%) to say they shop the Internet for health and beauty products—more than double Europeans (15%), Latin Americans (14%), North Americans (11%) and Middle Easterners (9%). Specialty stores were the destination of choice for 40% of Latin American and Asia Pacific shoppers and 95% of Middle Eastern shoppers say they buy health and beauty products from just two channels—supermarkets (56%) and drugstores (39%).

Mass vs. Premium: Looking Good Enough
A question for the ages: can mass market cosmetics successfully sell against more expensive, premium brands in such an image-intensive category tied to personal vanity and ego? Yes, although the degree of success varies by product type. Global results for hair products showed that 81% of online respondents think mass market hair products are a viable alternative, while 75% find mass market skincare products acceptable, and 72% believed mass market cosmetics were suitable.

North American respondents were the most positive about mass-market health and beauty products, viewing them as good substitutes, while Middle Eastern and Asia Pacific survey takers were the least enamored with the off-market products.

Region Round-Up
In almost all Latin American countries included in this survey, sales for personal care products reported volume increases during the latest rolling year ending June 2010 versus year ago: Chile +7.2%, Argentina +4.7%, Brazil +3.4%, Mexico +3.4% and Colombia +3.3%. Only Venezuela showed a negative trend, declining 2.5%.

In the U.S., dollar growth for the health and beauty department for the year ending July 2010 is flat (0.3%) and units have declined 2% as the economy is driving consumers to make tradeoffs and buy less. However, sales in the June and July 2010 period are improving as retailers are raising prices to enhance margins. In Canada, rising prices have fueled an increase in health and beauty (excluding baby and OTC) dollar sales of 3.2%, which outpaced the total market (+2.6%) while units were flat.

In Asia, consumers started to switch back into purchasing personal care, healthy and more premium products in the second half of 2009. This trend is expected to continue with the improving consumer confidence in the region.

The never-ending quest for beauty and perfection bodes well for the H&B sector. In countries that have emerged from the recession with vigor, the sector is likely to thrive. Meanwhile, in those regions where the recovery is still shaky—or in doubt altogether—health and beauty product manufacturers and retailers need to know exactly what’s important to those consumers: value for money and high quality products that enable them to look good, despite life’s pressures.

Note about online survey methodology
While online survey methodology allows for tremendous scale and global reach, it provides the perspectives on the habits of existing Internet users, not total populations. Where noted, the Nielsen Global Online Survey data is supplemented with consumption data by market.

Nikki Clarke, Marketing Mix Consultant, The Nielsen Company, United Kingdom

SUMMARY: Advertisers seek to understand the relationship between share of voice (SOV) and share of market (SOM). Many factors besides SOV contribute to increased market share including: brand size; life cycle stage; “newness”; campaign quality.

In the ongoing battle for greater sales and more market share, marketers are left wondering which strategy will increase their brand’s strength. In today’s tough economic times, advertisers seek insights to guide them in spending their limited budgets as efficiently as possible.

Most companies are trimming ad budgets. Global advertising expenditure across television, newspapers, magazines and radio recorded a 7.2% drop for the first quarter of 2009 compared to the same time period in 2008. In addition, with the explosion of consumer-generated media, these traditional advertiser-led media outlets are less trusted by consumers. Recommendations by personal acquaintances and consumer opinions posted online are now the most trusted forms of advertising globally, according to the latest Nielsen Global Online Consumer Survey. However, advertisers will be encouraged to learn that brand websites—the most trusted form of advertiser-led advertising—are trusted by as many people as online consumer opinions.

The concept of equilibrium

All things being equal, a brand whose share of voice (SOV) is greater than its share of market (SOM) is more likely to gain market share.

Excess share of voice (ESOV = SOV – SOM) is an important contributor to the level of growth. Brand size and life cycle stage also played a role in the analysis. To quantify just how much market share grows when advertisers increase their SOV, 123 brands were analyzed, across 30 different categories of ‘typical’ advertising (i.e., not award-winning campaigns).

On average, a 10 point difference between SOV and SOM leads to 0.5% of extra market share growth. Therefore, a brand with a market share of 20.5% with an ESOV of 10 points would grow to 21% market share over a year.

So, what is the implication for media planning? Excess share of voice can drive market share. The 10 to 0.5 ratio norm can be used for market share forecasting purposes when setting targets for fast moving consumer goods (FMCG) brands. In the study, there were large variances across particular categories and brands; therefore, a brand should measure its specific relationship between SOV and SOM to provide an accurate benchmark.

Drivers of growth
A number of factors explained the variation from the 10:0.5 normative return:

• Brand size
• Leaders vs. challengers
• New brands and new news
• Campaign quality

Brand size matters
There were wide disparities between the levels of growth achieved per point of ESOV by large brands compared to smaller ones. Smaller brands face an uphill battle to grow their market share through share of voice alone, and will almost certainly require ad campaigns with above-average effectiveness in order to succeed. Larger brands have distribution, range, and pricing to help to maintain and increase share. As a result, their ad campaigns do not have to be as effective.

Brand leaders vs. challenger brands
On average, brand leaders achieved 1.4% of share growth per 10% of ESOV, compared to 0.4% for challenger brands. Therefore, a typical FMCG challenger needs to be at least 3.5 times as effective as the leader to level the playing field. In this context, it is easy to see why challenger brands have to take a different approach to deliver the same scale of efficiency as the brand leader.

To illustrate the struggle faced by challenger brands, these findings were applied to compare the growth that would be achieved by a market leader to that achieved by a challenger brand if both sustained 10% of ESOV.

New brands and new news
Introducing something new for the brand or category generally resulted in greater growth responsiveness to ESOV. Brand launches or re-launches typically achieved 15-25% greater growth per point of ESOV than the norm. Brands in younger categories with less competition also fared better than those in mature categories.

Campaign quality
Using the right copy is a significant driver of brand growth. Campaign quality is the most significant driver of consumer-generated media and is important for traditional and new media. Nielsen investigated drivers of word of mouth, or ‘buzzability’. An example includes two United Kingdom ad campaigns that utilized viral marketing to elevate their brands to a whole new level of awareness.

In an attempt to reverse a long-term decline in the U.K. tea market and ignite sales for its PG Tips brand of tea, Unilever re-introduced “Monkey” in 2007—a widely popular animated puppet in the form of a knitted sock monkey as ambassador to the brand. The PG Tips Monkey campaign broke the mold in terms of cutting through buzz. However, when the award-winning Cadbury Gorilla aired a few months later, online chatter increased dramatically, and YouTube received 500,000 page views in the first week after launch, exceeding the levels achieved by the PG Tips Monkey to set a new benchmark.

Application for media planning
Clients are faced with increasing, maintaining, or decreasing support for their brand. In the short-term, it is tempting to make cuts to media investments. However, what is the impact in the long term? Three scenarios were investigated to demonstrate the use of the ESOV-growth model as a planning tool.

Scenario one used an extreme example, which showed the effect of a typical brand leader cutting its media budget to zero for two years while others maintained 2% media budget growth. The result showed that when the advertiser cut all spending, market share fell from 33.3% to 28.5% in the third year.

In scenarios two and three, the effects of two brand strategies were compared. One brand chose a modest investment strategy versus a more realistic reduced investment strategy. The investor brand raised activity by 2% in the first year, then by 3.5% in the second year, and finally by 4.5%. The disinvestor brand cut its activity by 20% in year one followed by 10% and stayed flat in the last year.

The outcome was enlightening. While the investor brand increased market share 15% in year three and grew profit by 2%, the disinvestor brand declined 20% losing 3% of profits. The apparent result is that short-term reductions to investment damage a brand in the long term, whereas brands that continue to invest maintain a stronger position over time.

The long view
Short-term reductions to media investments will likely damage a brand in the long-term. Clients that take a long view of brand strategy will emerge out of the down economy in a stronger position than those who focus on short-term savings.

To grow market share, five guiding principles can help navigate the correct levels of SOV investment:

1. SOV alone is not enough. Using the right copy is critical to drive returns
2. SOV/SOM differential matters. Excess SOV delivers growth: typically, 0.5% for a 10-point differential
3. Brand size matters. Market leaders drive greater returns from SOV than challengers.
4. ‘Newness’ delivers higher gains. Launches/younger categories respond at a higher level.
5. Short-Termism is dangerous. Correct level of SOV + quality campaign = stronger brands.

After the local cuisine, most international diners ranked Chinese and Italian food as their favorites. But Australians and Singaporeans preferred Chinese food over their own native dishes, while Hong Kong diners’ favorite cuisine was Japanese.  Those countries most loyal to their own national cuisines? Italy, with 91 percent of respondents saying they prefer their own cooking, followed by Turkey and India.

Consumers in Asia dine out more frequently than others, but in Hong Kong in particular, nearly one-third eat at a restaurant one or more times every day.  Europeans were least likely to go out for a meal, with the Dutch most likely to eat out less than once a month at 57 percent.

More details from the survey can be found in the latest edition of Consumer Insight.

The findings come from Nielsen’s Global Online Consumer Survey, conducted in 52 markets worldwide between September 22 and October 6, 2008.

Only 18% of respondents said they believe the recession will be over within a year.  Younger survey participants (ages 25 to 29) expressed the least amount of confidence, with just 6% saying the recession would be over within 12 months.  Older respondents (ages 65 and older) were also pessimistic about an immediate end to the recession — only 7% told Nielsen they believe the recession will be limited to one year.

More women than men (91% vs. 82%) feel the U.S. economy is in recession.  Men were also more optimistic than women about their personal finances — 39% of females described their finances over the next 12 months as “not so good,” compared with just 28% of males.  In addition, only 16% of women surveyed think their job prospects over the next 12 months will be good, compared to 26% of men.

Of those surveyed, 38% told Nielsen the ailing U.S. economy will be their biggest concern over the next six months.  Increasing fuel prices were the top concern for 10% of respondents, followed by debt (9%), increasing utility bills (7%), increasing food prices (5%), and job security (5%).

“By the end of the second quarter, most U.S. consumers had already come to the conclusion the country was in recession,” James Russo, vice president, Marketing, Nielsen, noted.  “As far as consumers are concerned, it doesn’t particularly matter that a growing number of economic indicators are pointing in that direction.  They were feeling pain in their wallets and bank accounts long before October’s tumultuous stock market activity.”

In order to cope with their economic woes, U.S. consumers told Nielsen they are trying to reduce their use of gas and electricity (67%), cutting back on out-of-home entertainment (56%), spending less on new clothes (55%), and using their cars less often (54%).  Just 4% report taking no action at all.

Those who do have extra money left after paying the bills told Nielsen they are hesitant to spend it.  After covering essential living expenses, 38% of U.S. consumers put any spare cash into savings, while 36% use it to pay off debts, credit cards, or loans.  Nearly a quarter of consumers (24%) report having no spare cash. 

View the full press release.

Read a related press release on consumer confidence in Hong Kong.

View results from Nielsen’s global survey of consumer confidence.

Learn more about the current state of the U.S. retail sector.

Read coverage of Nielsen’s findings in Seeking Alpha, Adweek, and Convenience Store News.

Learn more about global consumer confidence levels in the December 2008 issue of Nielsen’s “Consumer Insight” online newsletter.